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It used to be that top corporations picked up
MBA graduates as fast as schools could slap mortarboards on
their heads. These young guns drove corporate reorganization,
product innovation and marketing and implemented new styles of
leadership. They were a symbol of a new culture, and anyone
serious about a career in business aspired to earn those three
letters.

Today, the power of the MBA is not so certain. Many in corporate
America and academia say the degree that once defined bright,
snappy leadership now symbolizes a discipline that has lost touch
with the business world. They argue that MBA programs have become
too focused on research, and that in-house training at large
firms has more practical applications. They claim the programs
have failed to create the types of leaders who can deal with
globalization; some say they don't develop leaders at all, just
functionaries. Other critics think a focus on profit and share
value, rather than on ethics and sustainability, fostered the
type of narrow-minded thinking that led to the fall of Enron and
the last recession.

On the other hand, some academics point to an evolving curriculum
that has kept pace with and even led the business community. If
the MBA is useless, they argue, why do tens of thousands of
people still enroll in the programs every year?

When it comes to entrepreneurship, the question of whether to
invest in an MBA degree becomes even stickier. Can the necessary
skills for successful entrepreneurship be taught? Can those with
MBAs operate effectively only within large corporations? Are
recent entrepreneurial MBA degrees worth the time and money?

We spoke with two authorities on business education about the
state of the MBA and whether earning the degree is the right path
for aspiring entrepreneurs.

Thomas Robertson is dean of the Wharton
School at the University of Pennsylvania, the world's first
collegiate business school and one of the most prestigious.
Robertson acknowledges that business schools need to continually
strive to stay relevant, and he thinks the MBA is one of the best
tools a businessperson can have. It not only gives an advantage
in the global marketplace, he argues, but it also teaches
adaptability in an economy in which career-switching and constant
change are the norm.

Why should an entrepreneur consider enrolling in business
school?
It can be somewhat inefficient if you venture forth on your own
and have to learn everything as you go. That's an expensive
learning experience. But with an MBA focused on entrepreneurship,
you have formal courses that will bring you up to speed in
finance, marketing, sources of capital--things you could learn on
your own but that might be inefficient to do so. It might be more
difficult to raise money without an MBA. It's easier if you have
the imprimatur of a school behind you. That has some real
symbolic value and a network for you, which might turn out to be
very important.

How do you respond to criticism that MBA programs don't
address current needs?
There are over 100,000 graduates per year in MBA programs. MBA
programs should change constantly, and as a whole ours changes
constantly. We have a curriculum launching in the fall that is a
major change. In the last decade, business has become more
global, and the need to be international and have a global
footprint has become more and more important. It's important for
us to have a diverse class where our students can learn from one
another, and an important part of that is having international
students. Twenty-five percent of our students will work in
international environments right after graduation, and 35 to 45
percent of our students are international.

How can business schools stay relevant?
Business schools have to prove they are a force for good in the
world, and that's even more important with things like Occupy
Wall Street and the financial crisis. We create economic welfare
by creating knowledge and disseminating it so our graduates can
go work in business firms and be more effective and more
efficient. We have to be constantly innovative.

Entrepreneurship is becoming more and more important in our
economy and the world economy. It's a hot topic in the world, and
the whole debate in Europe about austerity vs. growth keeps
getting back to entrepreneurship. The U.S. has emphasized
entrepreneurship for a longer period of time than Europe. You
might argue that Wharton has had strong ties to entrepreneurship
since it was founded.

How can MBA programs address differences of opinion about
curriculum?
There was an interesting book that came out some time ago called
MBA: The First Century. Even from the beginning there have been
opposites. Some say the MBA has become too theoretical; some say
it's too applied. Some say it's too short-term-oriented; some say
too long-term-oriented. Some say MBA grads are too ambitious;
some say we need more ambitious MBAs. There's a constant debate
about what MBA programs should look like.

The problem is getting the right balance. There are 12,000
business schools in the world, and Wharton and a couple hundred
others are in business to create new knowledge and disseminate
it. We have to get the right balance between theory and practice.
We have 2 million subscribers to our journal Knowledge@Wharton,
which is published in multiple languages. The reason I'm
mentioning that is we're in the business of creating knowledge,
and there's an immediate payoff from what we do. If we don't do
research that helps firms in the wider world, then we're out of
business. We have to prove that the research we do is valuable to
businesses.

What do you do for entrepreneurs?
In our entrepreneurship program, we run a business-plan
competition with more than 400 students involved and more than
$100,000 in cash and prizes awarded to those students. We have
venture capital introductions and a business incubator, and we
have an entrepreneur-in-residence program. Students want to learn
about theory and new techniques, but they also want examples and
applications of what they're learning.

What type of person should look at MBA
programs?
Probably 95 percent of MBAs are going to go into either major
corporations or startups. The other 5 percent will go into
nonprofits or NGOs. The average work experience of our students
is close to five years. That creates a much richer in-class
environment. If you think about an MBA program, an awful lot of
what is going on is learning in teams and working together.
Students learn from one another, and they wouldn't be happy if
someone with no experience were there and not bringing anything
to the party. Students benefit from each other's meaningful work
experience.

Some critics have said MBA candidates are motivated by
greed. Is that fair?
People have a lot of motivations for pursuing an MBA. Students
come in with different backgrounds, and about half of them are
"poets"--that is, with backgrounds not in business, but who have
very often been working in business or have meaningful
experience. Over half are changing careers, and they need the
experience of an MBA and they need the content of the courses and
to make it onto the job market and to get interviews. For many
people, the MBA is a seal of approval so they can go out and
achieve their dreams of making money and contributing to the
social welfare.

Henry Mintzberg is probably the most outspoken critic of the MBA.
The Cleghorn Professor of Management Studies at McGill
University in Montreal and an entrepreneur in his own right,
Mintzberg argued in his 2004 book Managers Not MBAs that the
entire notion of graduate business education needs reform. His
opinions have only grown stronger since then. Not only do MBA
programs teach an insufficient style of management, he says, but
they also fall short in discussion of ethics. In fact, he has
written, "conventional MBA programs train the wrong people in the
wrong ways with the wrong consequences."

You say nothing has really changed in the years since
your book came out.
I think some business schools are moving in new directions, but
not many and not much. They're too fat and too successful and
make too much money from what's destructive. I think the problem
with the American economy is not economic; it's managerial.
Anyone who accepts a bonus of tens or hundreds of millions of
dollars while their company is failing is not a leader. Which
means almost no one in the Fortune 500 is a leader.

People say, "I can't believe what is going on in my company," and
a lot of it is led by MBAs. They learn management by remote
control. You learn to read case studies and sit in classrooms and
have to pronounce judgments on companies about which you know
almost nothing.

There's also a social element. Why does the U.S. still have an
electoral college? Because America's in social gridlock. It can't
move forward. The country is totally unreflective, whether it
comes to healthcare or the economy or the financial sector. It
prides itself on technological adaptability, but it is socially
unbelievably paralyzed.

I did an article for Fortune a few years ago that tracked the
record of Harvard Business School's most renowned graduates.
There were 19 people on the list, and 10 of them turned out to be
complete disasters, four were questionable at best, and only five
had clean records. These were listed as Harvard's best, and 10
were fired, their companies went bankrupt and worse. Wouldn't
that be a signal that something was wrong, if your greatest
graduates failed?

Do MBA programs hold any value for
entrepreneurs?
Look, I'm not a fan of conventional MBA programs, but you do
learn business functions like marketing, accounting and finance,
and entrepreneurs do need that. Many go bankrupt because they
don't manage the books well. But they don't need all the other
baggage that goes with the MBA--the technocratic view of
management. Those entrepreneur-focused MBA programs that are
sensitive to that and are not copying the regular MBA probably
can provide some help. I'm a fan of something different. I
co-created a program called the International Masters Program in
Practicing Management (IMPM). We have quite a few entrepreneurs
who have come from our program.

How is IMPM different from an MBA?
There are two sides entrepreneurs can learn from in our program.
One side is business functions. The other is a sounding board,
where they can discuss common problems, like how to deal with the
bank or market a program nobody has ever heard of. They're given
a forum to discuss their problems with other entrepreneurs. Half
the time they reflect on their own issues, and the other half
they problem-solve with other students.

What should entrepreneurs do if they don't want an MBA
but want more education?
They should look at CoachingOurselves.com, which is by a guy
who did our master's program. In full disclosure, I'm a
partner in that activity. It's a training program used by
entrepreneurial companies and brings business concepts into
the workplace. You get managers and entrepreneurs together in
small groups, and then download discussion topics, things like
dialoguing and branding. Then the managers chat among
themselves. They do the whole course all for themselves, and
that's really effective for entrepreneurs who need to talk to
each other. They need a conceptual basis, and they use the
discussion points as a stimulus to get into their own
problems. It's an effective way to learn, and a bunch of
entrepreneurs can create a team and use it to compare how
they're doing with their banks and customers vs. other
business owners.

What's the harm in getting an MBA? Doesn't it show
initiative?
There's a role for MBAs for people who go into technical
positions, like financial analysts, but other than that, anyone
with an MBA should have a skull and crossbones on their forehead.
It doesn't prepare them correctly and gives them the wrong
impression of management. Instead, I think people should get
smart, get educated, but mostly they should find a business or
venture or activity that they really love and get immersed as
deeply as possible before they try to create something.